Analyzing the Senate Ways and Means Committee Budget for FY 2019

May 15, 2018

Analyzing-the-Senate-Ways-and-Means-Committee-Budget-for-FY-2018

OVERVIEW

The Senate Ways and Means (SWM) Budget differs from the House
budget
only modestly: it makes somewhat larger investments in K-12 education,
and provides less new funding for early education; it proposes to hold
down pharmaceutical costs by allowing the Administration to negotiate
rebates directly with the manufacturers, and sets a spending target;
and it makes a few targeted new investments such as an initiative to
improve or create accessible affordable housing units for renters with
disabilities and an increase in funding for Regional Transit
Authorities.

In important ways the SWM and House Budgets are very similar. Both
include several significant policy changes:

An increase in the state
Earned Income Tax Credit (EITC) from 23 percent of the federal credit
to 30 percent. The EITC is a tax credit that primarily benefits low-
and moderate-income working parents and their families. Research
studies have found that in addition to encouraging people to work and
helping families to make ends meet, the EITC improves health outcomes
for mothers and children, and boosts children’s academic
performance.

An initiative proposed by the
Governor to increase funding for adult mental health services and to
restructure and expand the primary adult services program. The goal of
these reforms is to provide more coordinated, standardized, and
consistent treatment that will better align with health care systems,
and will be more comprehensive, particularly for people who also have
substance use disorders.

A change to the rules for
Transitional Assistance removing a restriction that bars families from
receiving benefits for a child conceived while the family was receiving
Transitional Assistance (the SWM budget makes this change effective
January 1, 2019 while the House made the change effective in FY 2020).

There was also much that the House and SWM budgets were both not able
to do, given revenue constraints. For example, both fund higher
education at levels that will likely lead to continued cost increases
for students. State funding for public higher education in
Massachusetts is down 32 percent since FY 2001, and those funding
reductions have led to increases in tuition, fees, and student debt.
Both budget proposals also continue to rely on temporary solutions to
balance the budget in FY 2019, suggesting that fiscal challenges will
continue into FY 2020.

The rest of this Budget
Monitor examines the SWM Committee proposals
for major state programs in greater detail. Links from the Table of
Contents below allow readers to jump to specific sections. Each section
also provides links to our online budget tools including our Budget
Browser(which provides funding information for
every
line item in the
state budget going back to FY 2001) and, where applicable, to our
Children’s
Budget. For a detailed examination of earlier FY
2019 budget proposals, please see MassBudget’s Budget
Monitors on the Governor’s
budget proposal, the
House
Ways
and Means Budget, and the final House
budget.

Quality early education helps prepare young children in the
Commonwealth for success throughout their education and allows them to
thrive. Early education and care also provides critical support for
working parents with young children, by offering safe and reliable care
for kids while parents provide for their families.

The Senate Ways and Means (SWM) Committee’s Fiscal Year (FY)
2019 budget proposal allocates $597.1 million to early education and
care. Total early education funding in the SWM Committee’s
proposal is an increase of $20.1 million (3.5 percent) above current FY
2018 levels. This amount, however, is $23.6 million (3.8 percent) less
than the FY 2019 proposal from the House.

Over the long term, there have been significant cuts to early education
and care since state tax cuts in the late 1990s and early 2000s.
Despite the SWM Committee’s proposed increase for FY 2019,
funding for early education and care would still be $162.0 million
(21.3 percent) below what was available in FY 2001, adjusting for
inflation (see chart below).

The SWM Committee’s FY 2019 proposal does not
provide funding
for Center-Based
Child Care Rate Increases which were funded at $15.0
million in the current FY 2018 budget and $20.0 million in the House
budget for FY 2019. This program helps improve early education quality
by increasing the rates paid by the state to child care providers. The
SWM Committee’s FY 2019 budget does build off the rate
increases that took place in FY 2018 and increases funding somewhat to
provide a full year of these higher reimbursements.

Though the SWM Committee does not provide specific funding to increase
the rates paid to early education providers, it does fund a modest
effort to expand early education programs to more kids. The SWM
Committee FY 2019 budget provides $5.0 million for the Commonwealth
Preschool Partnership Initiative, which did not receive
funding in the
House FY 2019 budget. This amount would also be $4.8 million above
current levels. This funding proposed by the SWM Committee would help
existing preschool providers, including school districts, expand
access, particularly for 3-year-olds and those with greater needs.

The SWM Committee’s FY 2019 budget provides $270.1 million
for
Income Eligible Child Care, $14.7 million (5.8 percent) above
current levels, identical to what the House proposed. This new funding
largely continues increases to early education rates approved in FY
2018, funding them for a full year. Income Eligible Child Care provides
subsidies for low- and moderate-income families not eligible for other
child care assistance. With insufficient funding to meet child care
needs across the state, the waitlist for subsidies contained more than
18,000 kids in March 2018.

The SWM Committee’s FY 2019 budget, like the House, provides
$235.8 million for
Supportive and TANF Child Care, $13.7 million (6.2
percent) above current FY 2018 levels and in line with what the House
proposed. This new funding will also support a full year of the rate
increases that were initiated in FY 2018. Supportive and TANF Child
Care provides subsidies to children under the care of the Department of
Children and Families and those receiving Transitional Aid to Families
with Dependent Children (limited cash assistance along with work
training programs for low-income families).

The SWM Committee’s FY 2019 budget does not provide funding
for a new initiative in the House budget, EEC Provider Higher Education
Opportunities, which the House funded at $8.5 million. The
initiative
is focused on professional development for early educators facilitated
by community colleges. The SWM Committee also did not include a related
Outside Section that the House proposed on improving early education
professional development and other aspects of supporting the early
education workforce.

In its FY 2019 proposal, SWM proposes eliminating funding for the
Reach
Out and Read (funded at $1.0 million currently in FY 2018).
This
program supports early literacy by partnering with pediatricians and
nurses to provide books to families and other steps to encourage
reading.

For information on funding for early education programs going back to
FY 2001, please see MassBudget’s Budget Browserhere.

K-12 Education

Providing an excellent education to all children in Massachusetts
supports future generations in the Commonwealth while contributing to a
strong, knowledge-driven economy. Chapter 70 education aid is the main
program for delivering state support to local districts across
Massachusetts, and ensuring that schools have sufficient resources to
serve all students. For further background on the state’s
education funding system, see Demystifying the Chapter 70 Formula.

The Senate Ways and Means (SWM) Committee’s Fiscal Year (FY)
2019 budget proposal increases Chapter 70 Aid and Reserves by $160.2
million (3.4 percent) to $4.92 billion. This increase is $23.2 million
(0.5 percent) above what the House proposed.

In determining the Chapter 70 allocations to cities and towns for FY
2019, the SWM Committee’s budget, like the House budget, took
into account several updates to last year’s calculations.

This FY 2019 Chapter 70 proposal includes an annual inflation factor of
2.6 percent, as determined under Chapter 70 law. This is more than
twice the FY 2018 rate. This Chapter 70 proposal also estimates that
statewide student enrollment will decline by 0.4 percent in FY 2019.
The SWM Committee includes a technical correction that the House made
to statewide enrollment that adds roughly 3,000 students who were
omitted from Chapter 70 calculations in the Governor’s
proposal.

Additionally, the SWM Committee’s Chapter 70 proposal
guarantees a minimum increase of $30 per student for districts that
would not otherwise receive additional aid, in line with the House.
Finally, the SWM Committee’s Chapter 70 proposal reduces the
required local contributions of districts that are above their
contribution targets by 100 percent as opposed to 92 percent proposed
by the House.

The SWM Committee’s FY 2019 budget continues modest steps to
implement some of the recommendations of the 2015 Foundation Budget
Review Commission (FBRC). The FBRC found that schools across the state
are significantly under-resourced relative to the
Commonwealth’s estimate of the costs of educating children,
called the “foundation budget.” This situation
limits the capacity of schools to help all children succeed.

The foundation budget is based on estimated costs for each element of a
school budget as determined by the Education Reform Act of 1993 and
adjusted mostly for inflation since then. The FBRC found that
components in the formula fail to reflect actual costs and student
needs in several areas, especially employee health care, special
education, as well as supports for English Language Learners and kids
living in poverty.

The SWM Committee’s FY 2019 budget partially addresses two of
these areas. On health care, the SWM Committee budget increases the
foundation rates for employee benefits (the category which includes
health care for school employees) by between 6 and 15 percent depending
on grade level and student category. This is more than the standard 2.6
percent inflation factor used in the rest of the formula. The
difference, the same as the House proposal, is based on the SWM
Committee assuming a seven-year phase in of a new Chapter 70 benefit
rate. According to the Department of Elementary and Secondary Education
(DESE), changes in FY 2018 and proposed by the SWM Committee for FY
2019 would collectively implement 29 percent of the
commission’s health care-related recommendations.

The SWM Committee, unlike the House and the Governor, addresses a
second area of the FBRC recommendations in its FY 2019 proposal,
related to English Language Learners (ELL). This SWM Committee budget
proposes converting the additional funding in the Chapter 70 formula
for ELL students from an entirely separate rate (which takes the place
of other categories such as elementary, middle school etc.) to an
increment on top of these other rates. This is similar to how the
Chapter 70 formula calculates addition funding for low-income students.
Contrary to current practice, the SWM Committee FY 2019 budget also
applies this increment to vocational students. In addition to these
changes the FBRC proposed making the ELL increment more consistent
across grade levels. The Senate Ways and Means Committee does make the
various increments for ELL students more uniform, ranging from roughly
$1,530 for vocational students to $2,354 for middle school. This
compares to a current range between no additional funding for
vocational through $2,331 for middle school. Overall the SWM Committee
implements 65 percent of the ELL changes proposed by the FBRC.

Collectively, by reducing local contributions by 100 percent for
districts that are above their target contribution (up from 92 percent
in the House budget), and adding ELL policy changes result in the $23.2
million greater Chapter 70 allocations overall in the SWM FY 2019
budget compared to the House. This figure accounts for slight
differences in how the House and SWM Committee dealt with Chapter 70
reserves (see discussion below). ELL policy changes likely account for
the majority of the difference between the SWM Committee and House
budgets.

In separate legislation, the Senate recently approved the entire set of
reforms proposed by the FBRC, charging the Legislature and the Governor
to agree to an implementation schedule for the changes –
limited by the amount of revenue available each year.

FY 2019 will be the third year that Massachusetts has used the
Economically Disadvantaged metric for calculating the number of
students in poverty served by districts across the state. In this
process, the number of kids considered economically disadvantaged is
determined by certifying kids through their enrollment in other public
services including MassHealth, Temporary Aid to Needy Families (limited
cash assistance and work training for low-income families), SNAP (food
stamps), and if they meet other criteria such as being in foster care.

Implementation of this new process initially caused a drop in statewide
poverty headcounts compared to prior years. To offset that drop, the FY
2017 and FY 2018 budgets increased the amount of funding directed to
each economically-disadvantaged student. DESE and other agencies have
made significant progress in identifying more students participating in
various state programs as economically disadvantaged. The SWM
Committee’s FY 2019 budget, appears to be in line with the
House’s, reflecting that over 339,000 students in poverty
have been identified, up 7.8 percent from 315,000 in FY 2018.
Identifying additional students in poverty tends to increase aid,
particularly for districts serving the lowest-income students. However,
this FY 2019 budget, like the House’s, reverses some of the
policy changes from the prior two years by lowering the amount of
funding included in the formula for each economically-disadvantaged
student by around 5 percent (about $200 per student). This counteracts
some potential aid increases that could have arisen from improved
identification of kids who are low-income.

An Outside Section of the SWM Committee’s FY 2019 budget
would address the challenges of counting low-income kids for Chapter 70
calculations by allowing districts to certify student income levels
through standard forms where families report their income. This change
would take place in FY 2020, giving DESE time to institute this
practice, which is similar to one used several years ago. This change
would have the potential to simplify the process of counting low-income
kids for some schools and would also address the undercounting of kids
who are ineligible or unenrolled in public benefit programs, despite
being low-income based on family income. However, districts would still
have the option of determining their count of low-income kids within
Chapter 70 by certifying student participation in other public
services. That process would also still be used for the purposes of
establishing enrollment in school meal programs.

The SWM Committee’s FY 2019 proposal includes $15.0 million
for the Chapter 70 Reserve (Foundation Reserve One Time Assistance).
This funding is intended to support districts who had an influx of
students from Puerto Rico and the U.S. Virgin Islands after recent
natural disasters. This reserve would provide supplemental aid for FY
2019 in the same manner as the current FY 2018 budget. The Chapter 70
Formula should account for these students when calculating future
Chapter 70 aid for FY 2020 if they remain enrolled. The SWM Committee
includes $12.5 million less funding for the Chapter 70 Reserve compared
to the House. However, the main Chapter 70 account has an additional
$12.5 million for the same purpose, assisting a handful of districts
receiving less aid than they otherwise would have as a result of the
change to the student poverty measure discussed above.

In line with the House’s proposal, the SWM
Committee’s FY 2019 proposal projects $862.6 million in
revenue for the Massachusetts School Building Authority (MSBA) to
support district construction and renovation projects across the state.
This amount is $16.0 million (1.9 percent) above current FY 2018
levels, less than the expected inflation rate.

The SWM Committee’s FY 2019 budget provides $100.0 million
for Charter School Reimbursements, $19.5 million (24.2 percent) above
current FY 2018 levels and $10.0 million above the House’s
proposal for FY 2019. When fully-funded, this program is intended to
reimburse 100 percent of increased outgoing student funding in the
first year and 25 percent of this amount for each of the following five
years.

However, according to recent FY 2018 projections from DESE, the current
$80.5 million funding level only supported 52 percent of the amount
called for by the formula, leaving a $74.1 million gap. The situation
would improve with the funding proposed by the SWM Committee for FY
2019. According to DESE projections, $100.0 million in reimbursements
would fund 58 percent of the formula, leaving a slightly reduced $71.6
million gap while the program would serve roughly 3,300 more kids. For
additional detail on charter school funding and the impact of recent
underfunding, see Charter School Funding Explained.

Apart from Chapter 70 Aid and charter reimbursements, the SWM Committee
FY 2019 budget increases funding for other state reimbursement programs
that benefit local school districts:

$318.9 million in support for
the Special Education Circuit Breaker, $37.7 million above current
levels and $18.6 million more than the House proposed. The circuit
breaker reimburses school districts for a portion of their costs for
educating students with severe disabilities.

$62.5 million in support for
Regional School Transportation, which is $1.0 million (1.6 percent)
above current levels, but also $1.0 million (1.6 percent) below the
House FY 2019 budget.

The SWM Committee budget would create a new line item, Civics Education
Trust Fund, funded at $1.5 million for FY 2019. This funding would
support expanded civics education efforts across the state.

In this SWM Committee budget proposal, $340,000 in funding for Bay
State Reading Institute and $300,000 for Reading Recovery is included
in the Literacy Programs line item (7010-0033).

The SWM Committee FY 2019 proposal moves the administration of Recovery
High Schools from public health agencies to DESE. For detail on this
initiative, see the Public Health Section below.

For information on funding for all K-12 education programs going back
to FY 2001, please see MassBudget’s Budget Browserhere.

Higher Education

Affordable high quality postsecondary education can provide
more young
people with the opportunity to choose their paths in life without being
blocked by insurmountable financial obstacles. In the long run, that
strengthens our overall state economy. Our system of public higher
education, comprising three
“segments”—the University of
Massachusetts, the state universities, and the community
colleges—has played a large role in this accomplishment.
Adequate state funding is necessary to help ensure quality
postsecondary education is affordable and accessible for all who want
to pursue it.

Overall, the Senate Ways and Means (SWM) Committee’s proposed
Fiscal Year (FY) 2019 budget funds higher education at $1.19
billion—roughly the same levels as the House’s
budget proposal, and 1.5 percent over the current FY 2018 budget. There
are, however, some notable differences between the SWM and House budget
proposals:

SWM’s proposal
increases direct funding to the state university campuses
by 3.8
percent over the current FY 2018 budget, while the House budget adds
just 1.0 percent. (See below for more detail on direct campus funding.)

SWM’s proposal
increases funding for community college workforce development and
training by $2.2 million, including $1.5 million in
stipends for
participants in workforce training and internships under the Training
Resources and Internship Networks (TRAIN) grant program.
The House
budget adds no new funding in this area.

SWM’s proposal adds
no new funding for scholarships—unlike the
House’s
and Governor’s FY 2019 budget proposals, both of which added
over $7 million.

Additionally, SWM’s proposed higher education budget:

Funds
day-to-day operations at
the Department of Higher Education at $3.6 million. This
is 9.5 percent
below the current FY 2018 budget, but 23.5 percent above the
House’s FY 2019 proposal.

Eliminates
funding for the
STEM Starter Academy, which aims to graduate community
college students
into university programs and careers in science, technology,
engineering, and math (STEM).

Eliminates
funding for the
Innovation Voucher Program Fund, which connects local
start-ups with
UMass laboratories and equipment. The fund, currently in its first
year, just began accepting applications in March 2018.

Campus Funding

As recently detailed in MassBudget’s report Educated
and
Encumbered, per-student state funding for public higher
education in
Massachusetts is down 32 percent since Fiscal Year (FY) 2001. These
cuts have played a significant role in tuition and fee increases across
all three “segments” of our state’s
system of public higher education—the University of
Massachusetts, the state universities, and the community
colleges—which have led to growing debt. Among students
graduating from public 4-year postsecondary schools, average debt grew
faster in Massachusetts than in all but one other state from 2004 (the
earliest year for which data are available for most states) to 2016.

The SWM budget proposal does little to reverse these trends. The SWM FY
2019 proposal calls for a 1.6 percent increase in direct funding across
all the state’s college and university campuses. By segment,
the SWM budget proposal:

Increases community college
funding by 1.4 percent;

Increases state university
funding by 3.8 percent; and

Increases UMass funding by 0.6
percent.

(These percentages and the figures in the following table are
adjusted
to account for the fact that all community colleges, as well as all
state universities except the Massachusetts Maritime Academy and the
Massachusetts College of Art and Design, send back—or
“remit”—their in-state tuition revenues
to the state’s General Fund. The Governor’s budget
proposal included an Outside Section that would create a task force to
look at these tuition retention and remission policies, but such
language is not included in either the House or SWM budget.)

As shown in
Educated and Encumbered, campus funding cuts have played a
large role in tuition and fee increases. The average tuition increase
from the 2016-17 academic year to 2017-18 was 5 percent across the
four-year campuses (the University of Massachusetts and the state
universities) and 4 percent at the community colleges.

State Scholarships

The SWM proposal funds state scholarships at essentially the same
levels as the current FY 2018 budget. The Governor’s and
House’s FY 2019 budget proposals called for over $7 million
in new scholarship spending. (The Governor specified that this money is
for community college students, the House proposal did not specify the
uses of the new funding.)

For information on funding for all higher education line items going
back to FY 2001, please see MassBudget’s Budget Browser here.

ENVIRONMENT & RECREATION

The state budget funds programs that keep our air, water, and
land
clean; maintain fish and wildlife habitats; and staff and maintain our
parks, beaches, pools, and other recreational facilities. The Senate
Ways and Mean (SWM) Committee’s Fiscal Year (FY) 2019 budget
proposes spending $208.0 million on environment and recreation
programs, which is $7.9 million or 4.0 percent more than the current FY
2018 budget. The SWM Committee budget is $4.9 million less than the
budget proposed by the House.

Some highlights from the SWM Committee’s budget for
environment and recreation programs include:

$2.2 million for
climate
change resiliency which is $2.0 million more than the FY
2018 current
budget and identical to the amount proposed by both the Governor and
the House. The Executive Office of Energy and Environmental Affairs
will use this funding to develop strategies, in coordination with other
state agencies and municipalities, to help plan for and adapt to
climate change.

$24.6 million for Department
of Environmental Protection (DEP) administration which is
level with
the FY 2018 current budget and $4.5 million less than the amount
proposed by the House. The House provided $29.1 million which could
allow DEP to hire additional staff to help with environmental planning,
permitting, compliance, and other activities. In 2016 over 100
employees left DEP as part of the state’s early retirement
incentive program which has strained the department’s ability
to fulfill its mission.

$63.4 million in total funding
for state parks
(see table below) which is $3.8 million more than the
FY 2018 current budget and $2.1 million less than the House. Like the
House, the Senate includes a new account for state parks projects which
provides funding to specific state parks facilities in the state. The
SWM Committee also proposes moving funding for street lighting and snow
and ice removal from its own account into the primary state parks
account.

For information on funding for environment &
recreation programs going back to FY 2001, please see
MassBudget’s Budget
Browserhere.

HEALTH CARE

MassHealth (Medicaid) &
Health
Reform

The Commonwealth provides health insurance to about 1.9
million people,
including more than 650,000—close to half—of the
state’s children. In addition, the state budget funds
payments to health providers, such as hospitals that serve
large numbers of low-income patients and nursing homes, to help pay for
care for patients on publicly subsidized health insurance.

MassHealth Program and
Administration

The Senate Ways and Means (SWM) Committee’s Fiscal Year (FY)
2019 budget for MassHealth is $16.50 billion, with $16.34 billion for
the MassHealth program, and $160.3 million for program administration
(see table). This total is $102.5 million less than in the House
proposal, and $208.4 million more than proposed by the Governor.
However, the Governor had proposed transferring the costs of some
MassHealth members from the MassHealth budget to the Health Connector
as funded by the Commonwealth Care Trust Fund (see discussion below),
so a portion of the Governor’s MassHealth cost reductions had
been partially offset by a proposed increase in spending at the Health
Connector.

The SWM MassHealth budget differs from the House proposal
largely in
two ways. The SWM budget differs in proposals for supplemental payments
and rate increases for providers, and the SWM budget anticipates lower
spending on pharmaceuticals as a result of a new strategy to control
pharmaceutical costs (discussed more below.)

Unlike the House, the SWM Committee includes a
proposal—similar to one introduced by the
Governor—that would work towards reducing the increasing
costs of pharmaceuticals. The SWM proposal, like the
Governor’s, would allow the state to negotiate drug prices
directly with manufacturers to obtain rebates for prescription drugs.
The Administration would also be able to impose a penalty against the
manufacturer if the manufacturer does not agree to a rebate, and the
Administration determines that the manufacturer’s prices are
excessive. The SWM proposal sets an annual prescription drug spending
target, aiming to reduce the state’s share of pharmaceutical
spending by at least 20 percent from the previous year. SWM has stated
that their spending reduction target would be $74 million ($32.6
million net of reduced federal reimbursement) for FY 2019, which is a
very aggressive target, according to state officials. The SWM proposal
does not include the Governor’s recommendation to create what
is known as a “closed formulary,” limiting the
medications MassHealth would cover.

The SWM budget, like the House budget, does not incorporate the
Governor’s proposal to shift some low-income adults from
MassHealth coverage to ConnectorCare at the Health Connector. To reduce
costs to the state, the Governor had proposed moving 140,000 low-income
adults off MassHealth coverage and into subsidized commercial coverage
funded through the Commonwealth Care Trust Fund and the Health
Connector (“ConnectorCare”).

SWM and the House both propose a direct transfer of $45.8 million into
the Commonwealth Care
Trust Fund. The Governor’s proposal had
included a transfer of $130.8 million, $85.0 million more, to cover the
costs of the adults that the Governor’s proposal shifted into
the Connector from MassHealth. The MassHealth funding table above
includes funding for the Commonwealth Care Trust Fund in order to more
accurately align the budget proposals. These are gross totals, and do
not reflect the impact on federal revenues of these spending proposals.
(“Net costs” reflect just the state costs after
subtracting federal reimbursement.)

Unlike the House, the SWM budget proposal DOES include:

$2.0 million in additional
funding for increased rates for outpatient
adult behavioral health.

$2.0 million in additional
funding for increased rates for children’s
behavioral health.

$1.0 million to cover the
costs of the first month of expanding adult dental coverage
to include
periodontics (starting June 2019).

$150,000 for the Academic
Detailing Program, which provides information to
prescribers from
unbiased academic or non-commercial educators. This program is designed
to provide an alternative to the information provided by pharmaceutical
salespeople about the efficacy of prescription medications. Although
not a new program, there is no funding for this in the current FY 2018
budget either.

Unlike the House, the SWM budget DOES NOT include:

$14.8 million in supplemental
payments for pediatric hospitals.

$4.0 million total in rate
increases for adult
foster care and adult day health.

$2.8 million in additional
wage incentives at
nursing homes.

Other Health Subsidies and Related Spending

The SWM budget also includes funding for other supplemental payments to
health safety net providers, funding for other subsidized health
programs, and other administrative and operational supports. In the
table below, the totals for the Medical Assistance Trust show current
budgeted appropriations. The timing of operating transfers into this
trust which are made up of provider assessments and federal revenues,
do not align with the state fiscal year. The funding differences from
year to year for other trusts also in part reflect timing discrepancies
or changing requirements based on federal Medicaid waivers. The
apparent large difference between FY 2018 and FY 2019 is simply due to
the timing of the transfers. There will likely not be a significant
difference in spending from this trust for FY 2019 compared to FY 2018.

The SWM and House budget proposals include payments to health safety
net providers through a variety of trusts, funded by a combination of
operating transfer appropriations, re-distributed assessments on
providers, and federal reimbursements. For example, with the roll out
of Accountable Care Organizations this year, funding for the Delivery
Systems Transformation Trust is no longer needed, and the
SWM budget
includes language to dissolve this trust. The SWM and House budgets
create a new trust, the
Safety Net Provider Trust, funded with $167.6
million to provide supplemental payments to health care providers based
on a new initiative in the most recent Medicaid waiver.

Moreover, as with other parts of the budget, the SWM and House budgets
incorporate proposals to implement expanded and improved behavioral
health and expanded
substance use disorder prevention and treatment. In
FY 2018, the state dedicated $47.0 million to a new trust fund to
support substance use treatment, supported by federal reimbursement for
the MassHealth program. The Governor’s proposal noted that
the Administration plans to spend $30.0 million from this FY 2018
allocation in FY 2019. The Administration also expects that with this
year’s implementation of the restructuring of MassHealth into
Accountable Care Organizations, care coordinators will be responsible
for fully integrating and aligning behavioral health services with
medical care.

To support the operations of Massachusetts’ health system,
SWM and House budgets both include $16.8 million to support the
operations of the state’s health
insurance eligibility system
at the Health Connector. There’s also $10.0 million for the
Health Information
Technology Trust in the SWM budget, $9.2 million
less than proposed by the Governor.

For information on funding for all MassHealth and Health Reform
programs going back to FY 2001, please see MassBudget’s
Budget Browser
here.

Mental Health

The Senate Ways and Means (HWM) Committee’s Fiscal
Year (FY)
2019 budget includes $873.2 million for the services of the Department
of Mental Health (DMH), to help ensure that people in the Commonwealth
struggling with and recovering from mental illness are able to become
healthy, and live and work successfully in the community. This amount
is slightly more than the House proposal, and is $100.7 million more
than the FY 2018 current budget—an increase of 13.0 percent.
DMH provides supports to approximately 26,000 people—children
as well as adults—through a network of inpatient facilities,
residential treatment programs, and community support services.

Strengthening the state’s supports for behavioral health
services has been a priority for both the Governor and the Legislature,
and there are behavioral health initiatives incorporated into funding
recommendations for DMH, as well as funding for MassHealth, the
Department of Public Health, and funding at the Department of
Correction (included in the “Law Enforcement”
section of this Budget Monitor) and in funding within education
programs as well.

The SWM budget, like the House budget, follows the Governor’s
proposal to increase funding for
adult mental health services overall
(see table) and to restructure and expanding the primary adult services
program (formerly known as Community Based Flexible Services) into a
different model called Adult
Community Clinical Services (ACCS). The
Administration has stated that when implemented, this new model will
provide more coordinated, standardized, and consistent treatment that
will better align with health care systems, and will be more
comprehensive, particularly for people who also have substance use
disorders. Compared to FY 2018 current budget totals, the SWM proposal
is 21.8 percent higher.

SWM recommends $92.2 million for Child and Adolescent Mental
Health.
This is $1.6 million above the House proposal and essentially level
with the FY 2018 current budget. This total includes $3.7 million for
the Massachusetts Child
Psychiatry Access Project
(MCPAP)—$100,000 more than recommended by the
House, but the
amount that is in the FY 2018 budget. MCPAP is an innovative program
that improves access to treatment for children with behavioral health
needs by making psychiatrists available to provide consultation for
primary care providers across Massachusetts. The SWM proposal also
includes language not in the House budget but included in the FY 2018
budget, that would dedicate $2.0 million of this total for case
management services, for enhanced services for older adolescents and
young adults, for consultation with early education and care providers,
and for recommendations to expand early mental health identification
and prevention programming.

For information on funding for all mental health line items going back
to FY 2001, please see MassBudget’s Budget Browserhere.

Public Health

The Fiscal Year (FY) 2019 budget proposal from the Senate
Committee on
Ways and Means (SWM) includes $638.6 million for the state’s
public health infrastructure. The Department of Public Health (DPH)
oversees a variety of prevention and treatment services, improves
access to health care, and ensures the safety of our food and water.
The SWM proposal is $3.7 million less than the House final proposal,
but $22.5 million (3.6 percent) more than FY 2018 current budgeted
totals.

Throughout the FY 2019 budget process, the Governor and both branches
of the Legislature have proposed expanded funding for substance
addiction treatment and prevention, in large part to address concerns
about the opioid epidemic. In the SWM budget, the most significant
overall increase in public health funding is an $11.2 million increase
in funding for the treatment and prevention of substance misuse,
bringing the total for these services to $157.6 million (see table
below for line items.)

Like in the House budget, the SWM proposal includes language in the
Bureau of Substance
Addiction Services designating $3.5 million to
support the opening of five new recovery centers, as well as language
maintaining a centralized system to coordinate information statewide
about available treatment beds for detoxification and stabilization in
order to improve access to services. SWM funds a line item for targeted
grants to address substance misuse treatment and
prevention at
$425,000, $2.0 million less than proposed by the House. Like in the
House budget, SWM proposes funding for Recovery High Schools,
therapeutic high schools that offer specialized programming for
students struggling with or recovering from substance misuse disorders.
The FY 2019 budget proposals transfer oversight for these schools to
the Department of Elementary and Secondary Education. MassBudget
transfers this funding back to DPH for more accurate across-year
comparisons of funding (see adjustment in table below.)

In order to support increased staffing at rape crisis centers,
the SWM
budget proposal also includes $37.1 million for domestic violence and
sexual assault prevention services. This is an increase
of 18.4 percent
over FY 2018 budgeted totals, and $2.5 million more than proposed by
the House.

The SWM budget proposal includes a total of $9.5 million for youth
engagement and youth violence prevention programming (see
table.) This
total is $2.9 million less than total funding in FY 2018, and also $4.2
million less than proposed by the House. Most notably, the SWM proposes
reduced funding for the Youth-At-Risk matching grant program which
typically funds specific teen empowerment and youth development
programs across the Commonwealth from $3.8 million in the FY 2018
budget to $500,000 for FY 2019.

The Legislature continues to reduce support for tobacco prevention and
cessation, down from $3.7 million in the FY 2018 budget to
$3.4 million
in the SWM proposal. Reduced funding for these prevention and
educational programs comes in spite of recent reports about the
increased use of electronic cigarettes (“vaping”)
among underage teenagers. At one time, Massachusetts led the nation
with its successful public health campaign to reduce smoking. In FY
2001, for example, the state budgeted more than the equivalent of $90
million (as adjusted for inflation) to support anti-smoking efforts.
This funding was cut dramatically in the next year, and has dwindled
over the subsequent decade and a half.

For information on funding for all Public Health programs going back to
FY 2001, please see MassBudget’s Budget Browserhere.

State Employee Health Insurance

The Senate Ways and Means (SWM) Committee’s Fiscal
Year (FY)
2019 budget proposal includes a total of $1.59 billion to cover the
costs of health insurance for state employees, just slightly below the
House proposal. This total includes coverage for current employees as
well as retirees (discussed more below).

In order to more accurately reflect health insurance costs,
MassBudget’s totals for state employee health insurance
include adjustments that allow for better across-year comparisons (see
table). MassBudget removes from budget totals the amounts each year
that are simply pass-throughs of funding for municipal health
insurance. Municipalities have the option of taking advantage of the
state’s purchasing power by using the Group Insurance
Commission (GIC) to purchase their employees’ health
insurance. Municipalities reimburse the state for the costs of this
insurance, so there is no cost to the state for adding these municipal
employees to the GIC membership rolls.

Recent legislation signed by the Governor consolidated funding for
elderly retired employees and retired teachers (known as
“Pool 2”) into the funding for current employees
(“Pool 1”). Combining these risk pools would make
coverage more affordable and provide additional choice for these
approximately 10,000 retirees.

State Retiree Benefits

The state has adopted a schedule to move towards full funding of health
and other non-pension post-employment benefits
(“OPEB”) for retirees. The Commonwealth funds the
current and future costs of OPEB through a variety of transfers to the
State Retiree Benefits Trust. The SWM budget proposal, like the House
and Governor’s proposals, includes $441.2 million in an
operating transfer directed to the State Retiree Benefits Trust. In
order to fully fund the cost of future retirees’ benefits, in
FY 2012 the state decided to dedicate an increasing share of its annual
Master Tobacco Settlement award to the State Retiree Benefits Trust.
The intent was to use 70 percent of the award in FY 2019, which would
be $175.9 million.

However, instead of transferring $175.9 million, the SWM budget, like
the House budget, proposes transferring an amount equivalent to just 10
percent of the Tobacco Settlement award—$25.1
million—into the State Retiree Benefits Trust to fund OPEB.
Language in the budget states that this transfer would come from
unexpended debt payments reverted to the General Fund or, if those
reversions are insufficient, the SWM proposal makes the transfer from
the Master Tobacco Settlement money deposited into the General Fund.
This total is $150.7 million less than the amount indicated for FY 2019
in the statute. Like in the House budget, SWM transfers an additional
$4.4 million from other sources into the
State Retiree Benefits Trust, bringing the transfer total to $29.5
million

For information on funding for State Employee Health Insurance going
back to FY 2001, please see MassBudget’s Budget Browser
here.

HUMAN SERVICES

Child Welfare

The Senate Ways and Means (SWM) Committee’s Fiscal
Year (FY)
2019 budget proposes $1.01 billion in funding for child welfare
services, which are designed to protect children at risk of neglect or
abuse. This amount is 2.9 percent more than FY 2018 funding levels and
1.5 percent more than the House budget proposal for FY 2019.

The SWM Committee proposes a significant increase for the Department of
Children and Families (DCF) Family Resource Centers, which
provide
families with information and referrals to state and local services.
The SWM Committee proposes funding these at $15.1 million, which is
54.7 percent more than current FY 2018 funding levels and 93.4 percent
more than the House proposal for FY 2019. The SWM Committee proposes
this increase so Family Resource Centers can expand to new communities
and meet increased need of families who were displaced by hurricanes in
the fall of 2017, many of whom are from Puerto Rico.

The SWM Committee proposes $750,000 for Foster Care Parent Outreach,
a
campaign to recruit and support foster families. This amount is
$500,000 (or 200 percent) more than current funding levels. Both the
Governor and the House had proposed level funding for this campaign.

For information on funding for all Child Welfare programs
going back to
FY 2001, please see MassBudget’s Budget Browser here.

Disability Services

Disability services include job training programs and
community-based
supports for people with disabilities and their families. The Senate
Ways and Means (SWM) Committee proposes $2.00 billion in funding for
disability services for Fiscal Year (FY) 2019. This amount is 2.6
percent more than FY 2018 funding levels and essentially the same as
what the House proposed for FY 2019.

The SWM Committee proposes $6.1 million for Community Services for the
Blind, which provides rehabilitation and social services
to
Massachusetts residents who are blind. Of this $6.1 million, the SWM
Committee proposes setting aside $300,000 for assistive technologies.

The SWM Committee also proposes $7.1 million for Independent Living
Centers, which offer peer counseling, skills training,
housing
referrals, transportation, and other services for people with
disabilities. This amount is $1.1 million more than FY 2018 funding
levels and $850,000 more than the House proposal for FY 2019.

The SWM Committee also proposes funding levels for autism services and
for the Turning 22
Program that are modestly different from the House
proposal. These are shown in the tables below. The Turning 22 Program,
which includes funding across three different departments —
Massachusetts Commission for the Blind (MCB), Massachusetts
Rehabilitation Commission (MRC), and Massachusetts Department of
Developmental Services (DDS) — pays for a portion of services
offered during the transition year when eligible young adults turn 22.

For more information on funding for all disability services going back
to FY 2001, please see MassBudget’s Budget Browserhere.

Elder Services

The Senate Ways and Means (SWM) Committee proposes $298.7
million for
elder services in its Fiscal Year (FY) 2019 budget proposal. Elder
services support the state’s older adults through a range of
services that promote independence, safety, and wellbeing. The SWM
proposed amount for elder services is 4.4 percent more than FY 2018
funding levels and 0.6 percent less than what the House proposed for FY
2019.

The SWM Committee proposes $15.7 million for Councils on Aging,
which
help elders access services like transportation, food programs, health
screenings, and education. This amount is $1.6 million less than the
House proposal and $1.5 million more than FY 2018 budget totals.

The Committee proposes $186,000 for the Elder Homeless Placement
account, which is $100,000 less than what the House
proposed and the
same as FY 2018 funding levels.

For information on funding for all elder services going back
to FY
2001, please see MassBudget’s Budget Browser here.

Juvenile Justice

The Senate Ways and Means (SWM) Committee Fiscal Year (FY)
2019 budget
proposes $178.3 million in funding for juvenile justice services, which
are run by the Department of Youth Services (DYS). This amount is 1.2
percent less than FY 2018 levels and is 0.8 percent more than was
proposed by the House.

In most areas, the SWM Committee proposes slightly more funding than
the House for juvenile justice services. The Committee proposes 3.7
percent more for DYS
Administration and Operations, for a total of $4.3
million. It also proposes 3.5 percent more for Residential Services for
Detained Population, for a total of $29.4 million. The
Residential
Services for Detained Population account funds detention services for
youth awaiting trial — DYS aims to divert low-risk youth from
secure detention to more appropriate and less costly placements.

The SWM Committee also proposes a little more for the DYS Alternative
Lock Up Program and for DYS Teacher Salaries.
The Alternative Lock Up
Program provides safe, non-police environments for youth awaiting court
appearances. The Teacher Salaries account funds enhancements to
educator salaries at DYS state- and provider-operated residential
programs.

The Committee proposes $350,000 for the Juvenile Justice Pilot
— a pilot for multidisciplinary approaches
including youth
mentoring, restorative justice programs, and assistance for families to
navigate the legal system (line item 0339-1005, housed under the Trial
Court). This amount is $100,000 more than both the Governor and the
House proposed.

The SWM Committee proposes $20.2 million for the Juvenile Court line
item (0337-0002, also housed under the Trial Court). This amount is
$1.5 million more than FY 2018 funding levels and is for raising
juvenile court investigator salaries.

For information on funding for all juvenile justice programs
going back
to FY 2001, please see MassBudget’s Budget Browser
here.

Transitional Assistance

Transitional assistance programs help low-income individuals
and
families meet their basic needs. The Senate Ways and Means (SWM)
Committee’s budget proposal for Fiscal Year (FY) 2019 funds
transitional assistance at $665.3 million, which is 6.3 percent more
than current FY 2018 funding levels and 1 percent more than what the
House proposed for FY 2019.

The SWM Committee, like the House, proposes removing a restriction that
bars families from receiving Department of Transitional Assistance
(DTA) benefits for a child conceived while the family was
receiving
public assistance. This restriction affects nearly 9,000 children.
Unlike the House, which proposed an FY 2020 effective date for the
change, the SWM proposes that it take effect January 1, 2019 and the
budget provides $5.5 million in funding for the change. This is under
the Transitional Aid for Families with Dependent Children (TAFDC) line
item, which is in the table below.

The SWM budget proposal increases the annual back-to-school clothing
allowance for recipients of TAFDC from $300 to $350
— while
the Governor and House Committee had proposed no change to the
allowance.

The SWM Committee also proposes a
change in the treatment of earnings
for TAFDC recipients who are required to work, which was
proposed by
the Governor but not by the House. Currently, the first $200 of monthly
earned income and 50 percent of the remaining earned income are
disregarded in calculating TAFDC benefits. The SWM proposal would not
count any of a working recipient’s earned income for either
the first six months of employment or when the recipient begins
receiving benefits (as long as total income does not exceed 200 percent
of the federal poverty level). After the first six months, 50 percent
of earnings would be disregarded in determining benefits.

The SWM Committee proposes setting aside $3 million for the Healthy
Incentives Program (HIP) within the SNAP Participation
Rate line item.
This amount is $500,000 more than current funding levels and $1 million
less than what the House proposed for FY 2019. HIP enables people to
purchase local fruits and vegetables at farmers’ markets and
community-supported agriculture (CSA) farm share programs.

The SWM Committee also proposes $1.5 million in funding to a new
account — the
SNAP Employment and Training Transportation
program — which provides $80 per month to cover
transportation costs of SNAP clients participating in job training
programs.

For information on funding for all transitional assistance
programs
going back to FY 2001, please see MassBudget’s Budget Browser
here.

Other Human Services

The Senate Ways and Means (SWM) Committee’s Fiscal
Year (FY)
2019 budget proposal includes $204.7 million for other human services,
including allocations for veterans’ services, food banks, and
some cross-agency initiatives such as the rate increases held in a
reserve account for a variety of health and human services providers
that we include in this subcategory of this Budget Monitor (see
discussion below). This total is $1.2 million less than in the House
final proposal, and $2.3 million less than the FY 2018 current budget
total.

Compared to the House proposal, the most notable difference is in
funding for the Emergency
Food Assistance Program, which supplements
federal funding to support the statewide network of food banks that
provide food to families struggling to make ends meet. The SWM
Committee proposes $16.5 million, while the House had proposed $18.1
million. The SWM proposal is a 6.6 percent reduction from the current
FY 2018 budgeted total of $17.7 million.

Like the House, the SWM budget includes $38.5 million for legally
required Chapter 257 rate
increases. This is the same amount provided
in the Governor’s budget. Chapter 257 standardizes rates paid
to various types of human service providers to make the system more
efficient and fair. The amount included in the Chapter 257 reserve
account funds the planned rate increases for providers across many
human and social service programs. This reserve contains the amounts
for the initial increases and, over the course of the year, those funds
are distributed to the individual agencies to fund their
providers’ rate adjustments. In subsequent years, the rate
increases would be included in the totals of the agencies that received
the funds, and included in the budget totals in those sections of the
Budget Monitor.

For information on funding for all line items for other human services
going back to FY 2001, please see MassBudget’s Budget Browserhere.

INFRASTRUCTURE, HOUSING
& ECONOMIC DEVELOPMENT

Transportation

The state supports an array of transportation systems,
including roads,
bridges, rail, buses, airports, and ferries that enable people and
goods to travel where they need to go. Much state funding for
transportation takes place through dedicated revenue sources and a
separate capital budget process funded through state bonds and federal
dollars. The annual budget process nonetheless plays a major role.

The Senate Ways and Means (SWM) Committee proposes $88.0 million for
the Commonwealth’s 15
Regional Transit Authorities (RTAs) in
Fiscal Year (FY) 2019. This amount would be $7.6 million above the FY
2018 level, and $6.0 million more than proposed by the House. Several
RTAs are proposing to cut bus routes and raise fares in response to the
funding amounts previously proposed by the House and Governor. The SWM
proposal would provide about the same amount as the RTAs received in
the FY 2016 budget, adjusted for inflation. Three outside sections of
the SWM budget would also impact policy for the RTAs:

Future distributions to the
RTAs would be tied to the inflation index, with increases capped at a 3
percent annually.

Similar to the House proposal,
the SWM budget would set aside $4.0 million of the line item amount
which will be distributed to RTAs conditioned upon their agreement to a
memorandum of understanding with the Department of Transportation about
adhering to best practices and filing information reports about
ridership, finances, and other performance criteria.

A task force would be
established to recommend guidelines for service standards, predictable
revenue streams, appropriate ridership, customer service, asset
management, financial performance indicators, and best practices for
Regional Transit Authorities. The House proposed a similar task force.

The Massachusetts
Transportation Trust Fund (MTTF) would receive a
$322.7 million transfer from the General Fund in the SWM Committee FY
2019 budget proposal, an increase of $19.3 million over the current
level. This fund contributes to highways, transit, intercity rail,
small airports, the Massachusetts Turnpike, and Motor Vehicle Registry.
The MTTF receives funds from tolls, federal transportation sources, and
the state’s Commonwealth Transportation Trust Fund. The SWM
Committee continues lawmakers’ longstanding practice of
funding snow and ice control below anticipated amounts, and then
providing supplemental funding to the MTTF later in the year for
clean-up from winter storms. By contrast, the Governor’s
budget had recommended $45.0 million more for snow and ice control, and
would do so through creation of a new, separate snow and ice control
fund with $83.0 million for FY 2019.

The budget proposes a transfer of $127.0 million in FY 2019 to support
operation of the Massachusetts
Bay Transit Authority (MBTA), the same
amount as in FY 2018 and $27.0 million less than proposed by the House.
In recent years, the agency has bridged shortfalls in its operating
budget by introducing various efficiencies, increasing its advertising,
selling off land and other assets, privatizing some functions,
increasing fares, and cancelling late-night bus service, among other
actions.

The 2013 Transportation Reform law mandated that by FY 2019 the MBTA
must shift full-time employees who had been paid through the capital
budget onto the operating budget as a way to free up additional capital
budget funds for improving the state of good repair at the authority.
The MBTA has already shifted hundreds of employees off the capital
budget and existing law requires shifting the rest in FY 2019 which
would add $27 million to the MBTA operating budget (and free up that
amount in the capital budget). The Governor’s budget proposed
changing this requirement to allow the MBTA to continue to pay an
employee from the capital budget if the employee is properly supporting
a capital transportation project. The House budget kept the requirement
to shift the employees to the operating budget, but provided $27
million in new funding to offset the additional operating cost.

The SWM budget proposes an approach similar to the Governor’s
budget by permitting the use of capital funds for these employees, and
would further mandate that no employee’s salary could be paid
for through bond funds, that the authority must define criteria for
categorizing employees under the capital budget, that the MBTA would be
required to post detailed information on their website about the
payment of employee salaries through capital funds, and that
information would need to be verified through a third-party auditor.

An outside section of the budget would also require the Secretary of
Transportation and the MBTA Control Board to develop a detailed plan
for the full electrification of the Providence and Fairmount Lines on
the commuter rail.

For information on funding for all transportation funding
going back to
FY 2001, please see MassBudget’s Budget Browser here.

Housing

Making sure that Massachusetts has an adequate supply of
affordable
housing for low- and moderate-income adults and children is an
important component of improving the health and quality of life of the
Commonwealth’s residents while also investing in our
state’s long-term economic success. The state budget funds
programs that provide shelter and affordable housing assistance to
families and individuals. The Senate Ways and Means (SWM)
Committee’s Fiscal Year (FY) 2019 budget proposes $456.2
million for the state’s housing programs, which is $2.4
million more than the House final FY 2019 budget and $4.4 million more
than the amount the state expects to spend in FY
2018.

Homelessness Assistance

Currently, almost 60 percent of the state’s housing budget
funds shelter, assistance, and short-term housing supports for families
and individuals who are homeless. The SWM Committee recommends spending
$262.3 million on homelessness assistance programs in FY 2019. Of that
the bulk ($155.9 million) goes to the Emergency
Assistance (EA) program
which provides shelter to very low-income families who are homeless and
have children. While this amount is $6.8 million more than the House
budget, it is $4.7 million less than the amount recommended in the
Governor’s budget proposal. The SWM Committee estimates that
its funding level is sufficient for FY 2019. Because EA provides a
right to shelter for low-income homeless families who are eligible,
however, the state needs to provide enough funding to meet demand. If
the final budget proposed by the Legislature and signed by the Governor
provides funding that does not meet need, the Legislature may have to
provide supplemental funding over the course of the fiscal year. The
Department of Housing and Community Development (DHCD) expects the
number of families needing shelter to fall in FY 2019 as the department
tries to help more homeless families become housed. The SWM budget also
includes language that requires EA to provide assistance to families
who, without shelter, would have to live in a place not fit for human
habitation, like an emergency room, car, or public park. Under current
law, and in the House budget, many families are not eligible for EA
shelter until they have lived in such places.

Below are some highlights in the SWM budget for homelessness
assistance. To see funding for all homelessness assistance programs see
the chart below. The SWM budget provides:

$3.3 million for shelter
and
assistance for homeless youth who are up to age 24 and are
not
accompanied by a parent or guardian. This amount is significantly
higher than the House Budget ($2.3 million more) and the
Governor’s proposal ($1.3 million more).

$18.5 million for
Residential
Assistance for Families in Transition (RAFT) which provides
one-time
assistance to help low-income families who are at risk of becoming
homeless to remain housed. The Committee’s budget is $1.5
million more than the House and $3.5 million more than the FY 2018
current budget. Often RAFT runs out of funds before the end of the
fiscal year on June 30th. The Committee’s proposal may be
sufficient to fully fund the program in FY 2019. The SWM Committee
budget, as in current law, also provides up to $3.0 million in RAFT
funds to help elders, persons with disabilities, and unaccompanied
youth. The House budget does not include this provision.

The SWM Committee does not fund a new Rapid Rehousing program for
homeless individuals proposed in the House Budget. The
House provided
$5.0 million.

Affordable Housing

The SWM Committee’s FY 2019 budget proposes $193.9 million
for affordable housing programs which is $7.8 million more than current
FY 2018 budget and $2.0 million less than the House. To see funding
levels for affordable housing programs, please see the table below.

The SWM Committee provides $97.5 million to the
Massachusetts Rental
Voucher Program (MRVP) which is the same amount as the
Governor’s FY 2019 proposal but $2.5 million less than the
$100.0 million provided in the House final budget. MRVP provides
housing vouchers to help low-income families secure housing, including
those who are living in EA shelters. The SWM Committee estimates that
its budget will allow DHCD to create over 200 new supportive housing
vouchers.

The SWM Committee budget proposes a new account with $2.7 million to
improve or create accessible affordable housing units for renters with
disabilities. The Committee’s language directs
DHCD to
prioritize improvements for units that can accommodate renters who
qualify for the Alternative Housing Voucher Program (AHVP), which
provides rental subsidies to low-income renters with disabilities. The
SWM Committee proposed providing AHVP with $5.0 million which is $1.2
million less than the House final budget.

The SWM Committee budget provides $2.6 million to cover the expansion
of housing courts
to every part of the Commonwealth. This amount is
$1.6 million more than the current budget, $1.1 million more than the
House and identical to the Governor’s FY 2019 proposal. This
amount will pay for increased personnel working at these
courts. (Note: This amount is not included in the total for
housing funding, since MassBudget includes it in the Courts subcategory
of the Law & Public Safety Category.)

The SWM Committee, like the House, does not provide funding for the
Housing Choice Initiative.
The Governor proposed $2.7 million in his FY
2019 budget.

For information on funding for all housing programs going back
to FY
2001, please see MassBudget’s Budget Browserhere.

Economic Development

Economic development programs aim to strengthen our
state’s
workforce, support community investments, and stimulate economic
activity. In total, the Senate Ways and Means (SWM) Fiscal Year (FY)
2019 budget proposes to fund economic development programs at $139.9
million. This is $2.9 million (2.0 percent) below current FY 2018
levels, and $14.1 million (9.1 percent) below the House’s FY
2019 budget proposal.

Workforce Development

The SWM proposal triples
funding to train and place unemployed and
underemployed workers in jobs in high-demand fields, to
$6.0 million in
FY 2019 from $2.0 million in the current FY 2018 budget. Specifically,
the SWM budget proposal for FY 2019:

Increases funding for the
Workforce
Competitiveness Trust Fund (WCTF) to $5.8 million, up $4.0
million from the current FY 2018 budget. This increase includes a
$750,000 transfer from the $1.0 million Learn to Earn line item.

Directs the remaining $250,000
in Learn to Earn
funding to new programs that address
barriers to
sustained employment, such as child care and transportation costs.

The SWM proposal’s increased funding matches the
Governor’s recommended increase. The House proposed
level-funding these programs at $2.0 million.

In other workforce development programs, the SWM budget proposes:

$24.0 million for the
Workforce Training
Fund, which is the same level proposed by the House,
and 2.0 percent below current FY 2018 funding.

$10.3 million for YouthWorks,
a summer jobs program for at-risk youth, which is 19.5 percent below
the House’s proposal, and 6.2 percent below current funding.

$3.7 million for One-Stop
Career Centers, which help job seekers, particularly those
receiving
unemployment insurance, improve their skills and navigate the job
search process. This is 8.3 percent below the House budget, and 6.0
percent below current funding.

$150,000 for the Re-Entry
Demonstration Workforce Development Program, which
provides workforce
development and supportive services to individuals transitioning from a
correctional facility. This is equal to current FY 2018 funding but
$350,000 below the House’s proposal.

Business and Industry

The SWM proposal recommends
$1.3 million for Small
Business Technical Assistance Grants, which are
competitive grants awarded to economic development organizations to
provide technical assistance or training programs to businesses with 20
or fewer employees. This is $500,000 over current funding but $750,000
below the House’s proposal.

SWM’s budget
proposal eliminates funding for the Massachusetts
Manufacturing
Extension Partnership (MassMEP), a collaboration of
government,
business, and academic partners, to help manufacturers plan and
implement strategies for increased competitiveness. MassMEP is unfunded
in the current FY 2018 budget; the House proposed $2.0 million in FY
2019.

The SWM budget proposes $2.5
million in funding to the Innovation
Institute of the Massachusetts
Technology Collaborative (MassTech), up from $1.0 million in the
current FY 2018 budget, and $2.0 million more than the House proposed.
The Innovation Institute “partners and invests with academic,
research, business, government, and civic organizations” to
develop the state’s innovation economy.

SWM’s proposal
follows the Governor in eliminating funds for MassTech’s
Technology and
Innovation Entrepreneurship program. The House proposal
would maintain funding at $1.6 million in FY 2019.

Travel and Tourism

The SWM budget proposes a total of $11.4 million in funding to market
travel and tourism in Massachusetts -- $8.0 million (41.0 percent) less
than in the current FY 2018 budget.

In most years, the majority of funding for tourism promotion
comes via
transfers from the
Massachusetts Tourism Trust Fund to the
Massachusetts Office of
Travel and Tourism (MOTT) and Regional Tourism
Councils. The Tourism Trust Fund is itself funded from
$10.0 million in
hotel excise taxes plus one percent of gambling taxes. Per statute,
40.0 percent of Tourism Trust Fund money goes to MOTT and 60.0 percent
to the Regional Tourism Councils. Budget appropriations provide
additional funding to MOTT in some years.

In FY 2018, this additional
funding came to $9.4 million. The SWM proposal reduces additional MOTT
funding to just $848,000 in FY 2019. The House and
Governor proposed
even less additional funding: $163,000.

The SWM FY 2019 budget
proposes a $4.2 million
transfer from the Tourism Trust Fund to MOTT,
bringing total MOTT funding to $5.1 million. This is $8.3 million (62.0
percent) below the current FY 2018 budget.

The SWM budget allocates the
statutorily required 60
percent transfer from the Tourism Trust Fund to
the Regional Tourism Councils, which comes to $6.4 million
in FY 2019.

In addition, the SWM budget:

Proposes $15.2 million for the
Massachusetts
Cultural Council, which funds and supports artists, local
cultural programming, and education in the arts and humanities. This is
$1.3 million (9.2 percent) above current FY 2018 funding but 3.0
percent below the House’s proposal. The Massachusetts
Cultural Council is allotted 2 percent of gambling tax revenue, which
is expected to come to $1.2 million in FY 2019.

Proposes $1.4 million for the
Massachusetts Service
Alliance, which serves as the state commission on
service and volunteerism. This is $1.7 million below both current FY
2018 funding and the House’s proposal.

For information on funding for all economic development
programs going
back to FY 2001, please see MassBudget’s Budget Browser
here.

LAW & PUBLIC SAFETY

The Law & Public Safety budget includes prosecutors;
law
enforcement; the Departments of Correction and Probation; sheriffs; the
courts; and legal defense for those unable to afford it. Overall the
Senate Ways and Means (SWM) Committee’s proposed Law
& Public Safety budget for Fiscal Year (FY) 2019 is $2.80
billion, which is 0.8 percent below expected FY 2018 spending and about
equal to the House’s proposed FY 2019 budget.

The Law & Public Safety budget includes a number of underfunded
accounts that have generally received significant supplemental funding
in the middle of the fiscal year. Best budgeting practices would
encourage including the full, anticipated cost for all programs as part
of the annual budget, rather than assuming mid-year supplemental
appropriations.

The SWM budget funds projected costs of collective bargaining
agreements that cover some of the state’s unionized public
safety employees. The budget documents do not describe the exact
allocation of these funds across the various public safety
subcategories, so readers should be aware that some of the
subcategories in the following table and in the text that follows will
end up with larger increases, once amounts and allocations of the
collective bargaining costs are final.

The SWM Committee’s proposed Law & Public
Safety
budget for FY 2019:

Provides a $4.0 million
reserve fund for
increasing assistant district attorneys’
salaries, $1.0 million above the House’s
proposal.

Establishes a $3.0 million
reserve fund for
increasing public defenders’ salaries.

Increases the
hourly rates
paid to some of the private attorneys who handle indigent defense
cases, matching the House’s proposed increases.

Decreases
funding for prisons,
probation, and parole by $20.1 million from expected FY
2018 spending,
about the same levels as the House proposal. This is an area of the
budget that is historically underfunded in budget proposals and then
supplemented later in the fiscal year.

Does not
follow the House in
funding new community-based re-entry programs in order to
reduce
recidivism. The House had introduced a $3.0 million line item for these
programs.

Increases
funding to three
groups and agencies that offer civil legal defense to low-income
Massachusetts residents; people incarcerated in
Massachusetts prisons
and jails; and low-income people with mental health concerns. The House
also increased funding for these accounts, though by different amounts
than the SWM Committee.

Prosecutors

The SWM FY 2019 budget proposes an increase of $11.7 million, or 7.0
percent, over expected FY 2018 spending on prosecutors—the
Attorney General and District Attorneys. This is about equal to what
the House proposed in its FY 2019 budget.

SWM proposes a $4.0 million reserve fund to bring minimum salaries for
assistant district attorneys above $46,000 in FY 2019.
This is $1.0
million more than the House’s proposal. A
2014 Massachusetts
Bar Association report found that Massachusetts assistant
district
attorneys were “grossly underpaid, earning far less than
their counterparts in comparative jurisdictions across the
country,” leading to a “revolving door of
prosecutors.” This reserve account was first funded in FY
2016 at $3.0 million.

SWM also proposes increasing the budget for the Attorney General by
$1.5 million (6.3 percent) over expected spending in FY 2018. The House
proposed an increase of 6.4 percent.

Law Enforcement

The SWM FY 2019 budget calls for $390.1 million in total spending on
law enforcement—a $3.7 million (0.9 percent) increase over
estimated FY 2018 spending.

While this includes a $4.8 million funding increase for the state
police department (about the same as the House), the SWM
proposed
budget also eliminates funding to hire and train new state police
recruits (as did the House’s proposal).

SWM proposes a decrease of $20.1 million (1.4 percent) from expected FY
2018 spending on prisons, probation, and parole—about
identical to the House’s proposal. Sheriffs and the
Department of Correction are typically underfunded in budget proposals
and then supplemented before the state closes the books on a given
fiscal year. For example, in FY 2017, net supplemental funding for
prisons, probation, and parole totaled $77.2 million.

SWM proposes an increase of $1.0 million (10.3 percent) for the
Massachusetts Alcohol and Substance Abuse Center—a
slightly
higher increase than the House’s proposal. The Massachusetts
Alcohol and Substance Abuse Center, housed within the Plymouth County
Correctional Facility, has been the subject
of recent criticism for its
treatment of people struggling with drug addiction.

Outside Section 47 in the SWM budget calls for “a special
commission to conduct a comprehensive study to evaluate and make
recommendations regarding the appropriate level of funding for the
department of correction and each sheriff’s
department.”

Courts

The SWM proposal includes a $20.9 million increase (4.0 percent) over
expected FY 2018 spending on courts—slightly more than the
House proposed. Whereas the House introduced $3 million in new funding
for community-based
re-entry programs, in order “to reduce
recidivism by providing transitional housing, workforce development and
case management” to people returning to the community from
prison and jail, the SWM budget does not include funding for these
programs.

The SWM budget does propose $5.7 million for specialty drug courts,
which provide supervised probation and treatment as an alternative to
incarceration for people with mental health and substance misuse
issues. This is $1.0 million (21.1 percent) more than the House
proposed, and $2.5 million (77.7 percent) about expected FY 2018
spending.

The SWM budget also significantly increases funding for the
state’s housing
courts (which you can read about in the
Housing section of this
Budget Monitor and
juvenile courts (which you
can read about in the
Juvenile Justice section).

Additionally, the SWM budget follows the Governor’s and
House’s budget proposals in including an Outside Section
authorizing the trial court to transfer funds within its divisions, as
long as no more than 5 percent of transferred funds come from the
probation and community corrections appropriations.

As noted above, the SWM budget adds $3.0 million in funding to increase
public defenders’ salaries, compared with $1.9 million in the
House budget. Outside Section 28 in the SWM budget would increase the
hourly rate paid to bar advocates who handle non-homicide cases in
Superior Court from $60 to $68—an increase of 13.3 percent.
Outside Section 29 would increase the hourly rate for bar advocates who
handle sex offender registry and mental health cases from $50 to
$53—an increase of 6.0 percent.

Compensation for bar advocates has historically been underfunded in
budget proposals and then supplemented before the state closes the
books on a given fiscal year. The SWM budget follows that pattern.

The remaining legal assistance funding is distributed across three line
items:

Prisoners
Legal Services (PLS)
is a nonprofit that provides civil legal defense to, and advocates on
behalf of, people incarcerated in Massachusetts prisons and jails, with
particular focus on health care, assaults by correctional staff,
conditions of confinement, and segregation (which includes solitary
confinement). The SWM budget increases PLS’s funding by
$291,000 (18.1 percent). The House proposed a 9.5 percent increase.
Currently there are over 3,000
prisoners for every PLS attorney.

For information on funding for all Law & Public Safety
programs
going back to FY 2001, please see MassBudget’s Budget Browserhere.

LOCAL AID

Unrestricted Local Aid

The Senate Ways and Means (SWM) Committee’s Fiscal
Year (FY) 2019 budget proposes to increase Unrestricted General
Government Aid (UGGA) by $37.2 million (3.5 percent increase) over
current FY 2018 levels to $1.10 billion. The amount is the same as in
the budgets proposed by the Governor and House. The increase is less
than last year’s increase of $39.9 million.

General local aid helps cities and towns fund vital local
services such
as police and fire protection, parks, and public works. For more
information on general local aid, please see MassBudget’s
report, Demystifying General Local Aid.

The Commonwealth’s capacity to fund general local
aid has been hindered by a series of significant state-level tax cuts
during the 1990s and 2000s combined with the Great Recession. While
general local aid funding has increased in step with or slightly above
inflation over the past several years, it remains 39.8 percent below FY
2001 levels, when adjusted for inflation.

Other Local Aid

The Commonwealth provides other sources of local aid to cities and
towns for more specific purposes. The largest form of local aid is for
K-12 education, which is discussed separately in the K-12 Education
section. Aid for libraries is also discussed in its own section in this
Budget Monitor.

The SWM Committee’s budget proposal would provide $4.4
million for the Municipal
Regionalization and Efficiencies Incentive
Reserve – $7.1 million below the current
amount, and $495,000
below the House proposal. As part of this proposal, the SWM budget
would provide $200,000 for Worcester economic development and $250,000
for Framingham’s transition to a city form of government. The
remainder would be provided for a competitive public safety grants
program for populous communities with low per-capita police funding.

Some cities and towns receive other forms of non-education local aid
from smaller programs that provide aid only to a subset of qualifying
cities and towns. For example, the SWM Committee’s budget
would provide $28.5 million for local payments in lieu of taxes to
communities with state-owned land that is not subject to local property
taxes. This amount is $1.7 million more than the Governor and House
proposals, which would be the same amount that has been distributed
each year since FY 2014.

For information on funding for Local Aid programs going back to FY
2001, please see MassBudget’s Budget Browser
here.

OTHER

Libraries

The state budget supports local libraries, the Boston Public
Library,
which serves as the primary research and reference service for the
Commonwealth, and other library programs in Massachusetts. The Senate
Ways and Means (SWM) Committee Fiscal Year (FY) 2019 budget provides
$26.6 million for public libraries, which is $1.1 million more than the
current FY 2018 budget and slightly above the House budget.

The SWM Committee budget, as noted in the table below, provides funding
increases for several library programs above the FY 2018 current
budget. The largest increase (over $500,000) will allow the board of
Library Commissioners to improve how
library resources and technology
are made available to people throughout the Commonwealth.

The SWM Committee budget does not provide funding for the Center for
the Book which helps to promote literacy in the state.

For information on funding for all libraries line items going
back to
FY 2001, please see MassBudget’s Budget Browser
here.

REVENUE

Overall, the Senate Ways and
Means (SWM) Committee Fiscal Year (FY) 2018 budget is similar to that
of the Governor and House in terms of underlying revenue assumptions
and specific tax policy proposals. As is typically the case, the SWM
budget is based on the same Consensus Revenue Estimate (CRE) used by
the Governor and House.

Like the Governor’s and House's FY 2019 budgets, the SWM
budget proposal contains new sources of revenue from casinos and
marijuana, as well as a new temporary source of federally-induced
corporate income tax.

The two major tax-related policy proposals included in the SWM
Committee budget are: an increase in the state match to the federal
Earned Income Tax Credit (EITC) that would provide additional funds to
low-income working families when they file their 2019 taxes in 2020;
and establishment of a standing commission to review tax expenditures.

Tax Revenue

The starting point for every state budget is the CRE. The FY
2019 CRE figure agreed to by the Administration, the House, and the
Senate is $27.59 billion, an amount $933 million or 3.5 percent above
the current FY 2018 benchmark estimate of $26.66 billion, which is a
$157 million increase over the prior benchmark estimate. In light of
about $220 million in other tax law changes (such as a triggered
reduction in the personal income tax rate), however, this means that to
achieve the level of actual
tax revenue growth ($933 million), the
baseline revenue growth in FY 2019 would have to increase by $1.15
billion, or 4.3 percent, over the FY 2018 benchmark estimate.

With the FY 2018 fiscal year three-quarters complete as of the
end of
April, total tax collections were 3.7 percent above their benchmark
levels. It is not clear, however, how much of revenue collections in FY
2018 are influenced by taxpayers shifting income from one year to
another in anticipation of federal tax law – which would
suggest some of the increases are more temporary. Much of the increase
is driven by estimated income taxes, which are more likely influenced
by income shifting and are up by 34.3 percent over benchmark.
Meanwhile, income withholdings, which are probably not influenced much
by income shifting, are up only 0.6 percent over benchmark. Sales and
use taxes, which are not affected by income shifting, are up 1.4
percent over benchmark. In sum, the higher-than-anticipated revenues at
this point in FY 2018 appears to be mostly a temporary spike and not a
new trend that would substantially affect FY 2019 tax revenue levels.

The SWM Committee follows the Governor and the House in making
other
assumptions that would also affect the amount of available tax revenue
for the budget:

Personal
income tax rate
trigger – Included in the CRE is the assumption
that revenue
growth in FY 2019 will be strong enough to trigger another automatic
reduction in the personal income tax rate, dropping the rate as
directed by law from the current 5.10 percent to 5.05 percent on
January 1, 2019, halfway through FY 2019. The Department of Revenue
estimates that this rate drop will cost the Commonwealth about $84
million in forgone revenue in FY 2019 (over the course of half a
calendar year). (Read more about the automatic rate reduction mechanism
in this MassBudget FAQ.)

Marijuana
sales –
With the legalization of recreational marijuana, the budget anticipates
$63 million in marijuana sales taxes and excise taxes, $40 million of
which is directed to the Marijuana Regulation Fund, $3.7 million of
which is directed to the Massachusetts School Building Authority, and
$19.3 million is transferred to the state’s General Fund.

Casino opening
– The
budget proposal appears to anticipate the same revenue associated with
casinos as does the Governor and the House. They anticipate $60.0
million in revenue associated with the opening of a new resort casino.
Of this total, $43.8 million will support budgeted spending and $16.2
million are “pre-budget” transfers allocated
outside the budget process and directed to non-budgeted funds. In
addition, they anticipate $54.4 million in revenues from slots at the
Plainridge casino, which is approximately $10 million less than in FY
2018, due to the projected impact of the opening of a new resort casino
in Springfield.

Corporate
dividend
repatriation – As a result of the new federal
tax law, the
Governor’s budget anticipates $65.0 million in new, one-time
revenue from the accumulated profits of the foreign subsidiaries of
U.S.-based corporations. While these subsidiaries’ foreign
profits were subject to U.S. taxation when they were
“repatriated” in the form of dividend payments back
to the U.S. parent, over $2 trillion is currently held (for tax
purposes) abroad. The new federal law deems these profits to have been
repatriated and applies a discounted federal tax rate – thus
creating a one-time increase in revenue. Under existing state law, a
small share of these repatriated profits attributed to Massachusetts
will be subject to taxation.

Tax
settlements – As
a result of legal settlements and judgements, the Commonwealth
anticipates $125.0 million in revenue in FY 2019.

While it will not impact this year’s budget, the SWM
Committee follows the Governor and the House in proposing to expand the
state’s Earned Income Tax Credit (EITC) by increasing the
state match of the federal EITC from 23 percent to 30 percent. This is
a refundable tax credit for low-income workers to increase the
after-tax rewards from work. It is available only to tax filers with
earned income and provides benefits primarily to workers with children.
The new federal tax law erodes the value of the EITC over time by using
a slower adjustment for inflation. A body of research has shown that
— in addition to encouraging people to work and helping
families to make ends meet — the EITC improves health
outcomes for mothers and children, and boosts children’s
academic performance and lifelong earnings (see MassBudget’s
“A
Credit to Health: The Health Effects of the Earned Income
Tax Credit” for more information). By
increasing
Massachusetts’ state match rate to 30 percent, the
Commonwealth would be on par with New York’s match, below
some states such as Vermont and New Jersey, and more generous than
several other states, such as Maine or Rhode Island. The proposed
increase would begin January 1, 2019, meaning the higher credits would
be paid when workers file their taxes in 2020. The annual cost for the
increase will be about $65 million per year when fully implemented. The
last time the Governor’s budget proposed increasing the EITC,
it proposed cuts to the state’s Film Tax Credit to pay for
the change. This year, the Governor, House and SWM
Committee’s FY 2019 budgets do not propose a funding source
for the cost of this initiative when the state begins paying for it in
FY 2020.

An outside section of the budget would establish a standing tax
expenditure review commission to evaluate the administration,
effectiveness, and fiscal impact of the Commonwealth’s tax
expenditures and to make recommendations as to whether each tax
expenditure should be repealed, allowed to sunset, or amended to better
achieve its policy goals. “Tax expenditures” are
special tax exemptions, deductions, or credits that result in forgone
revenue with the intention of advancing other policy goals. For
instance, the Commonwealth foregoes over $1 billion annually in special
business tax breaks meant to spur economic development (See
MassBudget’s report, “The
Growing Cost of Special
Business Tax Spending”). The proposed
commission would
regularly review all tax expenditures on a rotating schedule.

Department of Revenue Administration

Among its other activities, the Department of Revenue (DOR), through
its Office of Tax Administration, makes sure that taxpayers are paying
taxes they legally owe to the state. These activities are funded
through two primary accounts including the DOR administrative account
(1201-0100) and the Additional Auditors Retained Revenue account
(1201-0130). DOR hires auditors and collectors who identify taxes
legally owed to the state that have not yet been paid, and works with
taxpayers to collect these unpaid taxes.

For these DOR tax activities, the Governor, House, and SWM Committee
each propose a combined $106.7 million, which is 0.2 percent more than
current FY 2018 funding levels, but remains 41.0 percent below the 2001
level, when adjusting for inflation. The DOR’s lower funding
levels in recent years partly reflect large numbers of employees who
have taken part in the Commonwealth’s early retirement
program. Large staff reductions can have implications for
DOR’s ability to identify and collect all the taxes owed to
the Commonwealth, such as those that lead to large tax settlements. If
vacated positions are not filled in future years (which will require
reversing some or all of the recent cuts), there is a danger that the
cuts not only could permanently reduce the Commonwealth’s
ability to collect unpaid taxes that are legally owed to the state, but
also that such cuts could engender greater levels of tax evasion. If
sophisticated, well-financed taxpayers come to view DOR’s
audit and collection capacities as permanently degraded, some of these
taxpayers could see this as an opportunity to reduce their tax payments
through increased levels of tax evasion or other forms of
non-compliance.

You can see historical funding levels for administration of the DOR at
MassBudget’s Budget
Browserhere.

Non-Tax Revenue

As in every state budget, the SWM Committee’s FY
2019 budget
proposal relies on a variety of non-tax revenues: federal revenues,
which are mostly reimbursements from the federal government for state
spending on Medicaid (MassHealth and related costs); departmental
revenues, which are fees, assessments, fines, tuition, and similar
receipts; and what are known as “transfer”
revenues, which include lottery receipts, revenues from the
newly-licensed gambling facilities, and funds that the state draws from
an assortment of non-budgeted trusts.

There are several non-tax revenue issues of note in the SWM Committee
budget proposal. Like the House, the SWM Committee counts on $259.9
million in revenue from an assessment on employers to offset increased
MassHealth costs. This assessment was put into place in response to a
growing number of private sector employees not getting
employer-sponsored insurance and instead enrolling in MassHealth. This
revenue source is scheduled to end after FY 2019.

The SWM Committee budget relies on less federal revenue than
the House
budget, but this is largely due to differences in the amounts proposed
for spending within the MassHealth (Medicaid) program. The revenue
differences are due to lower federal Medicaid reimbursements associated
with lower MassHealth spending levels (see the MassHealth and Health
Reform section of this Budget Monitor.)

The expansion of gambling in Massachusetts has generated some new
revenues for the Commonwealth. The SWM Committee budget includes $14.7
million in gambling revenue as “pre-budget”
transfers to support a variety of specific programs described in
relevant sections of this Budget Monitor, and uses $1.5 million that
the House dedicated to the Race Horse Development Fund instead to pay
for general appropriations throughout the budget. Moreover, the SWM
Committee counts on an additional $15.0 million transferred from the
Race Horse Development Fund to support agricultural and environmental
expenses. The House did not include this transfer. Like the House, the
SWM Committee relies on an additional $92.2 million from casino revenue
which would be transferred into the budget to support specific
initiatives, and an additional $6.0 million which would be transferred
into the Stabilization (“Rainy Day”) Fund (see
discussion below.)

Like in the House budget, there is $2.9 million in new fees from
licensing marijuana establishments. Neither the SWM Committee nor the
House include the Governor’s proposal that would have reduced
anticipated revenues from limited liability charters by $3.9 million.

Temporary Budget-Balancing Strategies

The SWM Committee FY 2019 budget relies on $667.4 million in temporary
budget-balancing strategies. A budget-balancing strategy is
“temporary” when it is a change that does not
permanently affect the balance between revenues funding the budget and
spending from the budget. These can be revenue initiatives that have a
short-term impact, or one-time spending changes that don’t
permanently change spending totals. The SWM Committee balances its
budget with initiatives on both the revenue side as well as initiatives
on the spending side. Using temporary strategies to balance the budget
can lead to long-term fiscal problems, because such temporary revenue
sources are useful for balancing the budget only in the current fiscal
year, and their use most often adds to the challenge of balancing the
budget in future years. (See table and details below.)

The Stabilization (“Rainy Day”) Fund

The SWM Committee’s and House budgets both propose making the
full statutorily-required $88.5 million deposit of capital gains taxes
to the state’s Stabilization Fund (“Rainy
Day”) Fund. The SWM budget also includes the House proposal
to direct $4.4 million of that total into the state pension fund, and
$4.4 million into the State Retiree Benefits Trust (see discussion in
“State Employee Health Insurance” section of this
Budget Monitor.

In addition, both SWM and the House deposit $6.0 million from gaming
revenues and $3.7 million from the liquidation of state property into
the Stabilization Fund. Dollars set aside in the Stabilization Fund are
particularly important to the state when the current long economic
recovery period comes to an end and the state needs to support
increased costs associated with unemployment benefits and to fill other
shortfalls when revenues are reduced.

The SWM Committee budget proposal includes new language authorizing a
comprehensive study evaluating the fiscal management of the
Stabilization Fund. This study would review investment strategies, and
consider dividing the fund into higher and lower yield investments, to
protect the long-term purchasing power of the fund, and also to
considering the use of Stabilization Fund as a source of short-term
borrowing funds for the Commonwealth.

TOTAL BUDGET BY CATEGORY
& SUBCATEGORY

FY 2019 SWM
(Senate Ways and Means), FY 2019 House, and FY 2019
Governor columns show funding in the structure of the FY
2018 budget in
order to allow for more accurate across-year comparisons. For example,
if the FY 2019 budget proposal consolidates several line items,
MassBudget “un-consolidates” the total and
re-distributes the amounts back into their prior year’s line
items, based on information provided by the Administration or the
Legislature.

FY 2018 Current column shows the budgeted General
Appropriation Act as
enacted in July 2017, and as amended by supplemental budget legislation.

For other explanatory information, see details below the chart.

MassBudget’s totals
include the “pre-budget
transfers” of funds.
Statutes require certain automatic appropriations of revenue to support
certain functions independent of the annual budget. Although these
transfers function no differently from other appropriations, the
Governor and Legislature do not reflect these expenditures in their
budget totals; instead, they are shown as amounts deducted or
transferred from revenue prior to the budgeting process. To better
reflect total state funding, MassBudget includes these pre-budget
transfers in appropriation totals. In FY 2019, these transfers add
$4.70 billion to the total. These transfers are: tax revenues dedicated
to the Massachusetts Bay Transit Authority (MBTA) and school building
assistance, cigarette excises dedicated to the Commonwealth Care Trust
Fund, state contributions to the pension system, transfers to the State
Retiree Benefits Trust, transfers to the Workforce Training Trust, and
statutory allocations of gambling revenues.

MassBudget’s totals
include annual appropriations into
non-budgeted
(“off-budget”) trusts. The transfer of
funds from
the General Fund or another budgeted fund into a non-budgeted trust is
a form of appropriation, and should be treated as any other
appropriation. Prior to FY 2011, the budget authorized these transfers
in Outside Section budget language. Starting in FY 2011, a new section
of the budget, Section 2E, systematically accounted for the transfer of
funds into off-budgeted trusts. MassBudget’s totals include
these operating transfers in all budget years.

When spending that is now
included in the budget was previously “off-budget,”
MassBudget’s totals include the prior years’
“off-budget” spending totals in order to reflect
more accurate year-to-year
comparisons. For example, funding directed
to health care providers as partial reimbursement for uncompensated
care was previously funded by a transfer of federal revenue directly
into the off-budget Uncompensated Care Trust Fund. This spending was
brought on-budget in FY 2009, and incorporated into the
state’s budgeted health care appropriations.
MassBudget’s health care budget totals include the off-budget
spending for these services in order to reflect a more accurate
across-year comparison.

MassBudget reduces
State
Employee Health Insurance totals to exclude spending on
health
insurance for municipal employees and retired teachers for which the
state is fully-reimbursed by participating municipal governments.

MassBudget reduces funding for
the community colleges, state universities, and University of
Massachusetts campuses by the amount of tuition that these campuses
remit to the state treasury each year. These adjusted totals more
accurately reflect the “net” appropriations
available to the campuses to support operations, and allow for more
consistent comparisons across the years, since the policies about
tuition remission
have varied from year to year and from campus to
campus. For example, until FY 2003, all of the University of
Massachusetts (UMass) campuses were required to remit to the state
treasury all tuition from all students. From FY 2004 – FY
2011, UMass Amherst (only) remitted only in-state tuition, and retained
tuition from out-of-state students. Starting in FY 2012, the remaining
UMass campuses were also allowed to retain tuition from out-of-state
students. Starting in FY 2017, all of the UMass campuses retained all
tuition revenue, remitting none. The MassBudget adjustments make it
possible to make meaningful comparisons of appropriations to these
campuses even with these policy changes.

MassBudget’s totals
reflect legislatively-approved “prior
appropriation
continued” (PAC) amounts. In most instances,
MassBudget
shifts the PAC amount from the year in which the funding was first
appropriated into the year in which the Administration expects to spend
the totals.

Because MassBudget totals
reflect budgeted appropriations and not actual spending, there can be
apparent fluctuations in the MassHealth and Health Reform totals that
are simply due to the timing of payments to certain off-budget trusts.
These budget variations may not reflect real differences in spending.

Massachusetts Budget and Policy Center

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